RBI MPC Decision Due Friday, Economists Expect Repo Rate Hold At 5.25% Amid Inflation Concerns

Mumbai: Reserve Bank of India (RBI) Governor Sanjay Malhotra will announce the Monetary Policy Committee’s (MPC) interest rate decision on Friday after a three-day meeting that began on Wednesday.

Most economists and treasury heads expect the RBI to keep the benchmark repo rate unchanged at 5.25 percent. The central bank is likely to take a cautious approach as rising geopolitical tensions in West Asia continue to create uncertainty for inflation and economic growth.

Majority Expect Status Quo

According to a PTI survey, 11 economists and treasury heads expect the MPC to leave rates unchanged, while four respondents believe the RBI may increase the repo rate by 0.25 percent.

Many experts feel the central bank will prefer to wait and assess the impact of global developments before making any major policy move.

However, several respondents believe that if inflation pressures continue to rise, the RBI could resume rate hikes later in FY27.

Inflation Remains Key Concern

The RBI’s primary goal is to keep retail inflation, measured by the Consumer Price Index (CPI), at 4 percent, with a tolerance band of 2 percentage points on either side.

Rising crude oil prices and uncertainty in West Asia remain major concerns as they can increase transportation and input costs, leading to higher inflation.

This has prompted expectations that the RBI may avoid any immediate rate cuts and maintain a watchful stance.

Industry Seeks Stable Rates

State Bank of India Chairman C S Setty said economic growth would remain stable if the RBI keeps rates unchanged. He noted that market expectations also point towards a pause in interest rates.

Knight Frank India Chairman and Managing Director Shishir Baijal said a stable interest rate environment is important for the real estate sector.

He said steady borrowing costs help maintain housing affordability, support homebuyer demand, and encourage investments across the property market.

MPC Members

The six-member MPC is chaired by RBI Governor Sanjay Malhotra. Other members include Poonam Gupta, Indranil Bhattacharyya, Nagesh Kumar, Saugata Bhattacharya and Ram Singh.

The committee’s decision and policy outlook will be closely watched by businesses, investors and borrowers across the country.